Exhibit 99.2
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MARRIOTT HOTEL PROPERTIES II LIMITED PARTNERSHIP
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1998 Second Quarter Report
Limited Partner Quarterly Update
Presented for your review is the 1998 Second Quarter Report for the Marriott
Hotel Properties II Limited Partnership. A discussion of the Partnership's
performance and hotel operations is included in the attached Form 10-Q, Item 2,
Management's Discussion and Analysis of Financial Condition and Results of
Operations. As always, we encourage you to read this report in its entirety. If
you have any questions regarding your investment, please contact Host Marriott
Partnership Investor Relations at (301) 380-2070.
Host Marriott Corporation's Conversion to a Real Estate Investment Trust
As previously reported, Host Marriott Corporation ("Host Marriott"), parent
company of the General Partner of the Partnership, announced on April 17, 1998,
that its Board of Directors authorized Host Marriott to reorganize its business
operations to qualify as a real estate investment trust ("REIT") to become
effective as of January 1, 1999. As part of the REIT conversion, Host Marriott
formed a new operating partnership (the "Operating Partnership"), and limited
partners in certain Host Marriott full-service hotel partnerships and joint
ventures, including the Marriott Hotel Properties II Limited Partnership, are
expected to be given an opportunity to receive, on a tax-deferred basis,
Operating Partnership units in the Operating Partnership in exchange for their
current limited partnership interests. The Operating Partnership units would be
redeemable by the limited partner for freely traded Host Marriott shares (or the
cash equivalent thereof) at any time after one year from the closing of the
merger. In connection with the REIT conversion, the Operating Partnership filed
a Registration Statement on Form S-4 (the "Form S-4") with the Securities and
Exchange Commission (the "SEC") on June 2, 1998. Limited partners will be able
to vote on this Partnership's participation in the merger later this year
through a consent solicitation.
In order to assist you with your financial planning, we are providing you with
the preliminary valuation information on your Partnership units as disclosed in
the Form S-4. The estimated exchange value is $237,334 per Partnership unit (the
"Estimated Exchange Value"). The Estimated Exchange Value is subject to
adjustment to reflect various closing and other adjustments, and the final
valuation information will be set forth in the final Form S-4 you will receive
later this year through a consent solicitation.
The Estimated Exchange Value is being provided to you at this time for
information purposes only. We have not attempted to provide you with all of the
detail relating to the methodologies, variables, assumptions and estimates used
in determining the Estimated Exchange Value. The final valuation likely will
differ from the Estimated Exchange Value set forth above and such difference may
be material. The consent solicitation that will be mailed to you to solicit your
approval of a merger of the Partnership will contain the final valuation for a
Partnership unit as well as a discussion of the methodologies, variables,
assumptions and estimates used.
The solicitation period is expected to commence in late September, and the
merger, if approved, would close by the end of the year (although there is no
assurance that this will be the case). Please notify the General Partner in
writing of any address changes in order to facilitate the prompt delivery of the
consent solicitation documents to you.
Transfers of Partnership Units
If you wish to effect a transfer of your Partnership units, please contact our
transfer agent, Trust Company of America/Gemisys at 1-800-797-6812 for the
necessary documents. Please note, the General Partner does not charge a fee in
connection with the transfer of Partnership units. In addition to reviewing the
information provided in this report, we encourage you to consult with your
financial and tax advisors when deciding if you should sell or transfer your
Partnership units.
Cash Distributions
In August 1998, the Partnership made a cash distribution of $6,700 per limited
partner unit from second quarter 1998 operating cash flow. Year to date
distributions from 1998 operating cash flow totals $11,700 per limited partner
unit.